The headline news from RIL's 47th AGM was the announcement of a 1:1 bonus issue, as India's most valuable company sought to reward loyal shareholders. The RIL scrip ended up 1.5 % at Rs 3042, compared to 0.4% for the Nifty as a whole.
Though the bonus issue will doubtless dominate the headlines, investors will do well to pore over the richly detailed roadmap laid down in RIL Chairman Mukesh Ambani's speech.
The roadmap has three key elements. Exhaustive details of the growth plans for the new energy business, a continued emphasis on scale for all RIL's units, and an acceleration of the drive to convert RIL into a technology powerhouse or, to use the title of the AGM speech, a "Deep Tech and advanced manufacturing company".
This is to be accomplished through generous use of Artificial Intelligence across businesses.
"Reliance spent over ₹3,643 crore ($437 million) in FY24 towards R&D, taking our spend on research to over ₹11,000 crore ($1.5 billion) in the last four years alone. We have more than 1,000 scientists and researchers working on critical research projects across all our businesses. I feel proud to inform you that last year Reliance filed over 2,555 patents, mainly in the areas of bio-energy innovations, solar and other green energy sources, and high-value chemicals," Ambani said.
New Energy Business
Ambani has set ambitious targets for the New Energy business, pledging to achieve an earnings capacity in the next 5 to 7 years comparable to what the O2C business earns and what it has achieved over the last four decades. Towards this end RIL will invest Rs 75,000 crore in developing an ecosystem for the new energy economy.
The key elements of this are the establishment of large-scale manufacturing facilities for solar photovoltaic (PV) modules, battery energy storage systems (BESS) and a giga-electrolyser factory to address all parts of the value chain.
Jamnagar, the site of RIL's famous refinery, will house the proposed world-scale new energy units.
"Jamnagar is the Energy Capital of the World. I am proud to say that by 2025, Jamnagar will also become the cradle of our New Energy business. The Dhirubhai Ambani Green Energy Giga Manufacturing Complex will be the world's largest, most modern, modular, and integrated ecosystem at a single location," Ambani said.
Further the company has leased waste land in Kutch, to create green molecules through electrolysis with the intention of generating 150 billion units of electricity.
Scale Story
Scale was the leitmotif throughout Ambani's speech. Indeed, it has been the company’s DNA right from the days of its legendary founder, Dhirubhai Ambani.
In the area of digital services, Jio with 490 million subscribers now carries 8 percent of the world's mobile traffic. The company, which registered a net profit of Rs 20,000 crore on a topline of Rs 1,00,000 crore, has played a seminal role in elevating India to its current position of the world's largest data market. In the AGM Ambani introduced the launch of countrywide AI Infrastructure.
"We are laying the groundwork for a truly national AI infrastructure. We plan to establish gigawattscale AI-ready data centres in Jamnagar, powered entirely by Reliance's green energy, reflecting our commitment to sustainability and a greener future," Ambani said.
The proposed AI Infrastructure will make available AI infrastructure to sectors such as retail, healthcare, education, entertainment, small businesses and agriculture.
Reliance Retail (topline, Rs 3,06,848 crore net profit, Rs 11,000 crore) is now among the top five retailers in terms of stories and continues to grow 2.5 times faster than the rest of modern trade.
Despite these considerable achievements, Jio and Reliance Retail are expected to double revenues and EDITDA over the 3-4 years. Ambani also sees immense potential for the media business of which publication is a part. The much-awaited IPOs from Reliance Retail and Jio, when they happen, could potentially be blockbusters.
The growth plans for the Oil to Chemicals (O2C) and E&P businesses are also substantial though the newer businesses will dominate the news cycle.
Technology play
Ambani promised to double the size of the Reliance Group before the end of this decade. He also said that RIL expects to meet a target set in 2022, of doubling market capitalization.
"I am pleased to inform you that this year, Reliance is among the world's Top 50 most valuable corporations. In July 2018, Reliance crossed the $100 billion valuation mark. And in just six years, we have become the first Indian company to cross $250 billion in market value. In 2022, I promised that Reliance would double its value by the time we complete 50 Glorious Years in 2027."
RIL's current market cap is $244 bn (Rs 20.4 lakh crore).
In a report in July Morgan Stanley projected an increase of $100 bn in market capitalisation on the back of $60 bn investment between 2021 and 2023.
Key to achieving it will be completing RIL's transition into a producer of innovation and technology. Given the track record so far few would bet against it.
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